This old Florida Panhandle seaport, once bypassed by travelers on U.S. 98 because of its smelly paper mill, is reinventing itself. Again.

For starters, the stench of the paper mill -- "the smell of money," locals called it - is history, the mill reduced to a rubble-strewn vacant lot. Secondly, some world-class beaches with soft, white sand and awesome dunes are drawing vacationers that once went elsewhere in Florida.

Reinventing a town with varied constituencies and their often opposing goals can be tricky. It seems to be working in Port St. Joe, partly because the old is now part of the new. Add a pristine bay, a comparatively remote location, and a local business metamorphosis, and you get a picture of what was and what will be.

Nine-mile-long St. Joseph Peninsula State Park, which takes up the northern half of Cape San Blas, jutting out into the Gulf of Mexico to the south, was judged the best beach in the United States for 2002 by Stephen Leatherman, the Florida International University professor known as "Dr. Beach."

Leatherman, who holds a doctorate in environmental sciences and is author of "America's Best Beaches," annually ranks the best beaches in the United States based on 50 criteria of "beach health," including sand quality, water temperature and the number of sunny days.

As another gift of geography, Port St. Joe faces west, bringing stunning sunsets over Cape San Blas and part of St. Joseph Bay. Restaurants and a revamped hotel take advantage of this, setting up tables and rocking chairs that are as comfortable for dining, sitting and talking as they are ideal for photographers.

The town of St. Joseph dates to the 1830s, actually serving as the town where Florida's constitution was drafted in 1838 and 1839. In 1841, three-fourths of the population succumbed to yellow fever that arrived on a Spanish freighter. The few remaining residents were killed or fled after a hurricane and a tidal wave literally washed the town away in 1844.

Re-established in the 1920s, the resurrected city went industrial with the opening of the St. Joe Co.'s paper mill in 1938. Workers were well-paid and easily employed at the mill, in related forestry industries or in maritime trades. But despite comparative prosperity from union wages and job security, the consistent paper mill stench sent most passers-by out of town quickly.

Then, under new ownership, the mill finally closed in 1999.

The view of St. Joseph Bay was harder to enjoy as Gulf County's unemployment rate topped 20 percent. Many businesses closed, while local officials searched for ways to stop the economic hemorrhaging.

About the same time, the St. Joe Co., which is Florida's largest private landowner, turned its attention from forestry and paper to development of its vast real estate holdings in the region. Vacationers who had pushed the accelerator to go elsewhere began to slow down. And look. And stop.

It's an area in transition, usually with enthusiasm. Newcomers, drawn by the gin-clear bay water and abundant wildlife, work with many of the former mill rank-and-file to revamp existing businesses and establish new ones. For Port St. Joe, it's something of a rebirth. For the vacationer, it's just plain fun.

The recent gentrification of Florida's so-called "Forgotten Coast" is due, in part, to overdevelopment in other areas. While much of the area from Panama City west has been known as the "Redneck Riviera" for years, Gulf and Franklin County governments have been careful to prohibit beachfront high-rises or allow housing densities that would detract from the region's character.

Entry to Port St. Joe is from the north or south on U.S. 98 or from the northwest on Florida 71, which drops down from Interstate 10. In the case of 71, motorists literally T-bone into 98 with a spectacular view of the bay and the cape beyond. From the north, 98 crosses Tyndall Air Force Base out of Panama City, going through the tourist burgs of Mexico Beach and St. Joe Beach before the Intracoastal Waterway bridge over the St. Joe Canal. From the south, 98 winds roughly 20 miles through dense forest from historic Apalachicola.

For sailors, Port St. Joe's history as an industrial center is evident from the wide, well-marked entry channel. While some reaches of the bay can be shoaly, passage to the new and well-appointed Port St. Joe Marina is easy. Capt. Trey Landry provides a warm welcome, while the ship's store features Internet access, fuel, a pump-out station and an easy walk to groceries, restaurants and shops. The marina's Dockside Cafe is also worth a stop.

Once in town, the newest accommodations are at the refurbished Port Inn. Owners David and Patricia Warner have spent the last couple of years turning this old inn - once the center of social life in Port St. Joe - into what amounts to a 20-room bed-and-breakfast. The original hotel dates to about 1907, but it was rebuilt after a fire in the early 1940s.

Should beachcombing be on the agenda, rental agencies offer townhomes or beachfront houses for lease by the week at Cape San Blas, on the bay itself or in nearby Mexico Beach and St. Joe Beach. Rates vary according to season, with winter offering the low side. That also goes for the large El Governor hotel in Mexico Beach.

One of the major recent changes in Port St. Joe has been the variety of restaurants. What used to be a limited number of fast-food outlets and down-home Southern cafes has expanded to include some upscale eateries giving a much broader selection and some nice turns on some established favorites. The just-caught local seafood is the star - oysters, especially - but other menu items are usually well-crafted.

Two restaurants offer wonderful views of the sunset at dinner. The menu items at the Sunset Coastal Grill, right on the water, include a duck breast in a cherry sauce. While service can be leisurely, the wine selection is very good and the enclosed seating on the deck looks out over the nearby water.

The Dockside Cafe at Port St. Joe Marina is part of the working marina itself. It's more informal, with a menu consisting largely of burgers, grouper sandwiches, oysters and shrimp. But there are more elaborate items added in the evening, and all tables have a view of the boat basin, the small fishing jetty and the bay beyond. Current plans also call for townhomes and apartments to be added to the property in the coming two years.

While the downtown area reinvents itself, most of the activity around Port St. Joe involves being on, in or by the water. From scalloping to fishing to kayaking to ecotours, a number of companies offer advice, equipment and experience to explore it all.

St. Josephs Bay is ecologically unusual, since it's one of the few large bays in Florida that is not drained by a freshwater river. The mouth of the bay is relatively narrow, meaning the bay can be relatively smooth even when the Gulf of Mexico is too choppy for enjoyment in smaller boats. Sea turtles and other wildlife can be seen more easily than on the Gulf side of Cape San Blas.

Downtown Port St. Joe is different from nearby Apalachicola, where it's possible to spend an entire day strolling and shopping in the historic downtown area. While some antique and specialty shops have opened recently in Port St. Joe, downtown remains mostly a day-to-day working area. Most of the recreational focus remains on water and related activity.

The decision by the St. Joe Co. to begin development of its vast holdings is still the subject of local debate. While the company has so far promoted its WindMark and SummerCamp developments as being environmentally friendly and responsible, ecogroups keep a close eye on potential problems.

St. Joe has already scaled back some of its plans in hopes of portraying itself as a corporate friend. But some critics view the company as the 600-pound gorilla that can eventually do what it pleases. They also mourn the passing of the old paper mill, noting that a new service economy isn't going to generate the $20-an-hour pay the mill provided.

For the most part, however, the local attitude is enthusiastic and hopeful. The new, upscale developments bring more affluent newcomers with money to spend.